The names of the two countries are confidential and will be revealed only when they agree to negotiations, said a source from the US Embassy in Bangkok.

"Despite suspension of negotiations with Thailand, many countries want trade talks with the US," the source said.

Vietnam is one.

The US has launched an aggressive policy of forging FTAs with Asean members in a bid to open up the market for American goods and services so as to curb its trade deficit.

The source commented that if Thailand was losing interest in further trade talks with the US, the six rounds of negotiation already concluded would have been in vain.

"We want to see a free flow of trade, investment and services in Asia, so we can form an FTA with interested countries, Thailand among them, but if it takes too long to reach an agreement we may turn to other countries in the region instead," the source said.

So far Singapore is the only Asean country that has agreed to a comprehensive FTA with the US. In addition the US is negotiating with Malaysia, and it is hoped to reach an agreement this year.

The US has FTAs with Australia and Morocco and is interested in bilateral trade talks with many countries in Asia and Latin America.

Both Thailand and the US face internal problems, such as Thailand's political turmoil and the expiry in July next year of US President George Bush's trade authority, which could lead to protests against an FTA in either country and have brought the negotiations to a halt.

"If negotiations drag on, the US may turn to multilateral talks under the WTO in hopes of a better solution," the source said.

Prominent US economist Howard Rosen has said bilateral talks with Thailand could last another two years if the US Congress extends them till 2009, but Thai Board of Trade director Virachai Vongbunsin has indicated that this is too long for Thailand, which is eager to boost exports.

Some business sectors may be unable to compete if the US forms an FTA with other countries, he said, though he conceded that delayed negotiations might not incur losses as great as some industries feared since Thailand would gain more time to weigh the actual implications of an FTA.

Petchanet Pratruangkrai

The Nation